The Gig Economy’s Short Reach: An Analysis of the Scope of the Federal Arbitration Act’s “Transportation Worker” Exemption

The Federal Arbitration Act (FAA) governs arbitration agreements in the United States. Section 1 of the FAA provides an exemption from arbitration for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” In a 2001 decision, Circuit City Stores, Inc. v. Adams, the U.S. Supreme Court held that the residual phrase “any other class of workers engaged in foreign or interstate commerce” includes transportation workers. But, such language is ambiguous, and the Supreme Court did not expound upon what it means to be a transportation worker or to be engaged in interstate commerce for purposes of the exemption. Since the FAA’s enactment in 1925, modes of employment have evolved drastically and now include the recent platform or mobile-based gig economy—one subsect of which includes delivery drivers working for companies like Amazon Flex, Grubhub, Lyft, and Uber. Mandatory arbitration agreements in their employment contracts compel these drivers to arbitrate, rather than litigate, disputes against these companies. A circuit split has emerged regarding whether modern gig economy drivers fall within the “transportation worker” exemption, with courts divided primarily on whether these drivers are “engaged in interstate commerce.” Without a blueprint to follow, lower courts have created their own tests and applied their own standards to these drivers, leading to inconsistent results. Some courts have held that the driver does not need to cross state lines to be exempt from arbitration; instead, these courts look to the companies that these drivers work for to determine if the company is engaged in interstate commerce. If so, they find that the company’s workers are engaged in interstate commerce. Other courts emphasize that the driver must be a member of a “class of workers” that is engaged in interstate commerce, thereby requiring the driver to actually cross state lines to obtain the exemption. This circuit split highlights the difficulty of applying a near century-old statute to a modern worker context. This Note argues that, in the absence of a Supreme Court ruling or congressional amendment on the matter, lower courts should not exempt gig economy delivery drivers from arbitrating employment disputes against their platform companies because the drivers are not transportation workers engaged in interstate commerce